CleanSpark Inc., the third largest public Bitcoin mining company by hashrate, has agreed to purchase up to 160,000 Bitmain S21 miners, according to a Jan. 8 announcement.
The move could propel its hashrate to an impressive 50 EH/s over the coming year, marking a substantial leap from its current 10 EH/s.
Bitcoin hit a record high in mining difficulty to kick off the year and, with the halving only months away, miners are starting to ramp up their operational expansion efforts.
Fixed-rate deal
The deal involves an initial investment of $193.2 million for 60,000 units and a strategic option to acquire an additional 100,000 miners at a fixed rate of $18/TH/s over the next 12 months. The deal is a hedge against fluctuating prices once the halving kicks in.
Historically, Bitcoin’s price has shown a tendency to surge following its halving events — a feature built into its protocol to reduce the reward for mining new blocks by half, thereby slowing down the creation of new Bitcoins. CleanSpark’s investment is a strategic move to capitalize on this potential upswing.
CleanSpark CEO Zach Bradford said the purchase was a strategic decision to prepare for the next halving and ensure long-term, sustainable growth in an increasingly competitive industry. He added that the move highlights the company’s continued belief in Bitcoin. Bradford said:
“This is more than growth; it’s about ensuring operational efficiency and embracing market opportunities.”
CleanSpark’s operations, primarily powered by low-carbon power sources, reflect a growing trend in the cryptocurrency mining industry, where there is an increasing focus on sustainability and energy efficiency.
The Halving effect
Miners have been factoring in the halving into their projections for years, acknowledging its inevitability and preparing accordingly. The focus is on enhancing operational efficiency and securing economic incentives to continue supporting the Bitcoin blockchain.
This preparation is critical, especially for smaller miners who might struggle with profitability due to higher operational costs and less efficient equipment. The halving’s impact depends largely on Bitcoin’s market price. A higher Bitcoin price can offset the reduced block rewards, maintaining or even increasing overall mining profitability.
However, if the price remains low, the reduced rewards might push some miners, especially those with higher electricity costs and less efficient rigs, out of the network. This potential fluctuation in the number of active miners could lead to a temporary dip in the network’s mining difficulty, making mining slightly easier and more profitable for those who remain active.
There’s also a growing interest in alternative revenue streams, such as Bitcoin Ordinals, which have driven transaction fees within the Bitcoin network to new heights. These Ordinals, essentially metadata attached to each satoshi, create unique assets on the Bitcoin blockchain and have opened up new income opportunities for miners.